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Cal-Maine denies allegations in price-gouging lawsuit

Cal-Maine Foods, Inc. on Friday denied that it was practicing price-gouging during the Covid-19 pandemic.

The response came after the attorney general for Texas filed suit the previous day.

“There has always been great volatility in the egg pricing market,” the Jackson-based company said in a release. “The Covid-19 pandemic caused a massive disruption in every sector of the economy, including the egg industry.

“Retail demand for eggs reached historically high levels and egg prices increased significantly in line with those demand trends. However, egg prices have since declined quickly to pre-Covid-19 levels.”

“Cal-Maine Foods has not changed its longstanding approach to pricing. Any allegation to the contrary is simply not true.”

“For decades, like other egg producers, Cal-Maine Foods has priced egg sales based on a model utilizing independent, third-party market quotes published by Urner Barry, the leading provider of protein market news and information for the food industry.

Cal-Maine cited Urner Barry as saying the average market price thru 11 months is $1.23 cents per dozen for Large Grade A eggs. The low price for the year was on May 30, 2019, at $0.62 per dozen, or below break-even cost. The high price was $3.18 per dozen on March 26, 2020.

Before the pandemic, between December 2019 and February 2020, Cal-Maine’s prices in Texas were around $1.02 for generic eggs and $1.89 for specialty eggs, The Wall Street Journal said in citing the lawsuit.

Cal-Maine is the largest producer and marketer of shell eggs in the U.S., with a 19% overall market share.

According to the lawsuit, Cal-Maine’s price jumps weren’t justified because its egg supply wasn’t affected—the company has said its facilities have been fully operational, with no disruptions to delivery or its supply chain. “During this pandemic, neither production costs nor contractual obligations forced Cal-Maine to charge exorbitant prices,” the lawsuit alleges, according to The Wall Street Journal.

The surge in pricing followed a tough year for U.S. egg producers, The Journal reported. On March 30, Cal-Maine reported a 10 percent decline in sales for the quarter ending Feb. 29, because of shrinking egg prices and high supplies, with profit down two-thirds from the previous year.

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